Tuesday, February 24, 2009

Whoa! Moment

Hi, yes, it is me again, the woman who never posts. Well, I won't be doing much better any time soon, but I am sure this summer you will have more posts than you want. Ha ha. Anyway, we paid off a debt in full yesterday and as soon as we get some more bills from recent hospital visits we have endured we will probably pay off one more. If it is not paid off completely it will have a huge chunk taken out of it.

The rest of our debt will be paid off in 36 months or less. Oh, my goodness! Next month Picture of Wealth will turn 2. If I have been doing this for 2 years I can definitely stick it out for 3 more!! However that 36 months is what led to my Whoa! moment.

I was playing with my snowball calculator and just playing with some numbers. I took out the debt we just paid and just for fun, I took out the one that should soon be paid off. I ran the calculator with NO added payments even though we will be snowballing the money. The debt calculator said it would take 64 months to pay off the money!!! That is over 5 years. Subtracting 1 extra debt and adding no snowball money it would take over 5 years for us to be debt free.

So I added back the third debt since it is not actually paid off and ran the calculations again just to play and again I ran it with no snowball money added in. This time it took 60 months. My first thought was ???????? I just added a $5000 debt. How can it take less time to pay off? Then I realized... the $160 we are paying each month was now rolled into the calculations. That meant that as soon as that debt was paid off in the calculator it had "snowballed" the money to the next debt. Just doing that saved us 4 months worth of debt. Of course, those numbers don't mean anything because I did not add the debt we just paid off to the snowball. When I do that, AND as soon as we pay off debt number 2, we will be 36 months away from financial freedom!!!

We have a few more good things that will be happening in the next year or so though. I will probably teach summer school again $$$$$ We will get one out of daycare $$$$$$$$$$$$ and we will have 2 more tax returns in that time $$$$$$$$$$ I also put all overtime toward out debt. I would love to see us do it in 2 years!!!

We'll see!